Investors looking for stocks in the Banks - West sector might want to consider either East West Bancorp (EWBC - Free Report) or Bank of Hawaii (BOH - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, East West Bancorp is sporting a Zacks Rank of #2 (Buy), while Bank of Hawaii has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EWBC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
EWBC currently has a forward P/E ratio of 15, while BOH has a forward P/E of 16.31. We also note that EWBC has a PEG ratio of 1.43. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BOH currently has a PEG ratio of 1.92.
Another notable valuation metric for EWBC is its P/B ratio of 2.56. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BOH has a P/B of 2.92.
These metrics, and several others, help EWBC earn a Value grade of B, while BOH has been given a Value grade of C.
EWBC sticks out from BOH in both our Zacks Rank and Style Scores models, so value investors will likely feel that EWBC is the better option right now.